Price of European natural gas sinks after US-Iran ceasefire

The price of European natural gas fell sharply on Wednesday after a temporary ceasefire was agreed to stop fighting in the Iran war, with key futures contracts down by as much as 20%.

The drop is the biggest one-day reduction in more than two years.

On the Amsterdam exchange, the price of the benchmark TTF natural gas futures contract for delivery in one month was last down 17% at €44.13 ($53.61) per megawatt hour (MWh).

After the start of the US and Israeli attacks against Iran more than five weeks ago, the gas price on the market climbed to as much as €74 per megawatt hour.

Shortly before the expiry of an ultimatum by US President Donald Trump overnight, Iran and the US agreed on a two-week ceasefire and the re-opening of the Strait of Hormuz.

The near-complete closure of the waterway, through which about a fifth of the world's crude oil and liquefied gas is usually transported, drove fuel prices higher.

Although prices have dropped, little has fundamentally changed so far, stressed Tom Marzec-Manser, Europe director for gas and liquefied natural gas (LNG) at consultancy Wood Mackenzie.

"Aside from those trapped laden LNG cargoes which MIGHT leave in the coming two weeks, not much changes from a natural gas supply perspective until Qatar restarts Ras Laffan," he wrote, referring to the huge Qatari refinery.

The world's largest LNG hub was damaged by attacks during the conflict.

The markets are now likely to watch closely which ships pass through the Strait of Hormuz and how they fare.

Earlier this week, two Qatari LNG tankers abandoned their attempts to pass through the waterway after they did not receive authorization from Iranian officials.